Loading...
HomeMy WebLinkAboutMinutes - 07/12/2016 - Police Pension BoardPolice Pension Board of Trustees Regular Meeting July 12, 2016 1. Call to Order. A meeting of the City of McHenry Police Pension Board of Trustees was called to order at 3:30 PM 2. Roll Call: President Jeffrey Foerster, Kelly Ducak, Ormel Prust, Jon Meyer. Absent: Marc Fisher. Others present: Jim Schmidt, LPL Financial; Gary Karshna, Capital Gains, Inc.; City Treasurer Carolyn Lynch, and recording secretary Marci Geraghty. 3. Public Input None. 4. Approval of Minutes a) O. Prust made a motion, seconded by J. Meyer to approve meeting minutes from April 12, 2016 as presented and to hold them for audit. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried b) Semi -Annual Review of Executive Session Minutes: As recommended by Board Counsel, President Foerster called for a motion authorizing the release of Executive Session minutes from November 12, 2015, relating to the disability pension application from Officer Mark Gandor. J. Meyer made a motion, seconded by O. Prust to release the November 12, 2015 Executive Session minutes as presented. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried K. Ducak made a motion, seconded by J. Meyer to hold all other Executive Session minutes as the need for confidentiality still exists, pursuant to Counsel recommendation. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried M_ 5. New Business: a) Call for Nominations and Motion to approve Annual Election of Board Officers: President Foerster called for nominations for the office of President. J. Meyer nominated Jeff Foerster. No other nominations received. Foerster called to close nominations. Moved by O. Prust, seconded by K. Ducak. Voice vote was unanimous for the election of Jeff Foerster as President. Foerster called for approval of a unanimous ballot to be entered by the Secretary for Jeff Foerster as President. K. Ducak so moved, O. Prust seconded. Vote entered for the election of Jeff Foerster as President. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried President Foerster called for nominations for the office of Vice -President. J. Foerster nominated Jon Meyer for Vice -President. Foerster called to close nominations. Moved by J. Foerster, seconded by O. Prust. Voice vote was unanimous for Jon Meyer as Vice -President. J. Foerster called for approval of a unanimous ballot to be entered by the secretary for Jon Meyer as Vice - President. K. Ducak so moved, seconded by O. Prust. Vote entered for the election of Jon Meyer as Vice -President. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried President Foerster called for nominations for the office of Secretary. J. Meyer nominated Kelly Ducak for Secretary. No other nominations received. J. Foerster called to close nominations. Moved by J. Meyer, seconded by O. Prust. Voice vote was unanimous for Kelly Ducak as Secretary. J. Foerster called for one unanimous ballot to be entered by the secretary for Kelly Ducak as Secretary. J. Meyer so moved, seconded by O. Prust. Vote entered for the election of Kelly Ducak as secretary. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried President Foerster then called for nominations for the office of Assistant Secretary. J. Meyer nominated Ormel Prust for Assistant Secretary. No other nominations received. J. Foerster called to close nominations. Moved by J. Ducak, seconded by J. Meyer. Voice vote was unanimous for Mel Prust as Assistant Secretary. J. Foerster called for one unanimous ballot to be entered by the secretary for Ormel Prust as assistant secretary. J. Meyer so moved, seconded by Ducak. Vote entered for the election of Ormel Prust as Assistant Secretary. b) Consideration of Applications to participate in McHenry Police Pension Fund. K. Ducak made a motion, seconded by J. Meyer to accept applications to participate in the McHenry Police Pension Fund from newly hired officers Eve Kulcsar and Dinka Malik. 2 R1 Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried c) 2017 Police Pension Board Trustee Meeting Schedule. K. Ducak made a motion, seconded by J. Meyer to approve the 2017 Police Pension Board of Trustees Meeting Schedule as presented. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried d) Request for Proposals for Police Pension Board Actuarial Services: J. Meyer reported he contacted the IAA for the names of actuarial firms that specialize in police and fire funds; three were provided, Foster & Foster, MWM Consulting Group, and Lauterbach & Amen. J. Meyer told the board to expect the cost to be higher than what the current actuary is charging the fund. Proposals from interested firms will be due September 16"' and will be reviewed by the board at its October 11 `" meeting. O. Prust made a motion, seconded by K. Ducak to mail RFP's to the three firms as presented. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried Report of Investments and Accounts: a) Motion to approve Treasurer Report: Finance Director C. Lynch presented the Treasurer Report and reported approximately $772,000 was received from property taxes. As of June 30, 2016, full market value of the fund including cash and investments was $21,879,698.40. K. Ducak made a motion, seconded by J. Meyer to approve and hold for audit the Treasure Report as presented. Ayes: Ducak, Prust, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried b) Capital Gains Fixed Assets Investment Report: Fixed Assets Manager Gary Karshna presented the investment report for the period ending June 30, 2016 at which time the estimated Market Valuation was $8,954,198 and Book Valuation $9,024,530. The portfolio produced a 1.01% rate of return versus 1.20% for the Barclays Intermediate Bond Index during the first two months of the new fiscal year. Mr. Karshna reported the decision by Britain to leave the European Union has created uncertainty throughout the global marketplace. However, as of today, the market is rallying. The yield on the 10 year US Treasury Bond is currently below 1.50% and the yield on the 30 years US Treasury Bond is under 2.20%. We will add US Treasury bonds in the 10 to 30 year maturity range on price dips and sell longer term bonds after significant rallies. In that manner we can capture profits during bond market rallies and avoid getting buried in long term positions when interest rates rise. c) Equities Investment Report: Jim Schmidt of LPL Financial reported he visited American Funds in California and spent three -days listening to their analysts who brought up two interesting points. In the past when interest rates were at all time lows, they stayed low for decades and at this time, they suspect interest rates will continue to stay extremely low for quite a long time. However, compared to the rest of the world, our treasury yield interest rate is high. Their point is it's not low although we think rates are low. As soon as we try to increase rates, our country will have the debt problem and the fact that we are now a global economy and everyone is looking for a flight to safety around the world, the money is flowing back in the country. Prices on bonds drop because of all the cash entering the country. Bottom line, it is their opinion that interest rates are likely to stay extremely low. The second point they made is they believe the equity market returns are also going to be a lot lower than expected over the long run. Growth is extremely slow and every government around the world knows it. They do not expect the 7%, 8%, or 9% long term results, but more in the 4% - 6% range. Based on this information, the board's point of bringing the actuarial rate of return down makes a lot of sense. The stock market has gone up; we started the year at $11.5M and now we are slightly over $12M with a 4.2% overall rate of return. After Brexit, the International market is rebounding. We have to rely on American Funds to select the right equities that will create great opportunities. There is great value in all this volatility. Regarding the Portfolio Performance Summary, across the line the fund is in -line with indexes. `-' The New World Fund is doing very well in this market; even the International portfolios are doing fine. Equities are up 4.26% for the year. It will be interesting to see if we can continue this trend. 7. Unfinished Business: J. Meyer noted Tim Sharpe is currently working on the May 1, 2016 valuation report and asked if the fund is staying with the old assumptions. Ms. Lynch stated she will need to transmit revised numbers to Mr. Sharpe no later than the end of this month. President Foerster noted we should have the actuarial valuation report for board review at the October meeting and in time for the City Council tax levy discussion. J. Meyer reported we are currently using assumptions of 7.5% rate of return and 5.5% salary scale and he would be interested in seeing assumptions using lower percentages. After some discussion, the board agreed to submit to Mr. Sharpe the following: 7% rate of return and 4% salary scale 7% rate of return and 4.5% salary scale 7.5% rate of return and 5.5% salary scale. a) Payment of Bills: The following bills were presented for approval: Capital Gains, Inc.: $4,882.00 J. Meyer Reimbursement for Trustee Training $200.00 Pension Fund State Compliance Fee $4,230.39 Motion by O. Prust, seconded by K. Ducak to approve payment of bills as presented. 4 Ayes: Prust, Ducak, Foerster, Meyer Nays: None �— Absent: Fisher Abstain: None Motion carried b) Training Update: Trustees Foerster and Prust completed eight hours of training videos and have satisfied the state ethics training requirement for the period 8/12/15 — 8/12/16. M. Fisher and K. Ducak need to complete 8-hours of trustee training. c) President Foerster reported Justin DeBolt who is receiving a disability pension is required to complete an annual physical. The board attorney informed President Foerster the cost for DeBolt's Independent Medical Exam will be approximately $3,000 to $3,500. Unless the board has any objections, the IME will be conducted this year and next year, our attorney will recommend a more cost-effective approach to this requirement. d) J. Meyer shared information he received from the IPPFA regarding a survey for the refunding of state and local pensions 2015-2020. The survey indicates the funded status of public pensions has increased from 73% in 2014 to 74% in 2015, which indicates that 38% are more than 40% funded, and 20% are under 60% funded. The City of McHenry is at 52.9% funded. J. Meyer stated he is concerned that the city's funding may not be enough in the long term, especially if actuarial assumptions are reduced. He added in his opinion, there are only two way to improve the funding status of the pension plan; continued significant increases in investments or increase the city's funding. C. Lynch said the plan must be funded 90% by 2040. President Foerster added as long as we meet the actuarial number each year, the plan should be funded as expected. 8. Adj ournment K. Ducak made a motion, seconded by O. Prust to adjourn the meeting. Ayes: Prust, Ducak, Foerster, Meyer Nays: None Absent: Fisher Abstain: None Motion carried The meeting was adjourned at 4:30 PM. Next meeting: October 11, 2016. Respectfully submitted, Marci Geraghty, Rec flng Se r tary